Qatar launches CBDC testing for wholesale payments

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Qatar has launched a pilot for its central bank digital currency (CBDC), partnering with local and global banks to test large payments in securities transactions.

The Qatar Central Bank (QCB) announced this week that it had completed the development of the infrastructure for its digital riyal. The QCB began studying CBDC two years ago and has advanced rapidly to keep pace with its peers, some of whom are at advanced stages in CBDC exploration; this includes the neighboring United Arab Emirates, which is testing mBridge with China and Thailand.

According to the state-owned Qatar News Agency, the top bank will target large transactions in the securities market. It will also seek to leverage the CBDC to enhance access to the capital market and improve domestic settlement.

In the pilot phase, which runs until October, the QCB will explore artificial intelligence (AI), distributed ledger technology (DLT) and other emerging technologies.

“The results of this experiment will be the cornerstone towards identifying the different use cases that the QCB will adopt in the future, which will contribute to enhancing the efficiency of the current systems and instant settlement,” the QCB stated.

Despite the quick advancements, Qatar has maintained that it’s still in the early stages of exploring the digital riyal. QCB governor Sheikh Bandar bin Mohammed bin Saoud al-Thani stated last month that the bank is still studying the pros and cons of the digital currency.

In an earlier interview, the governor revealed that the bank would focus on wholesale CBDC applications “and then potentially expand the scope over time.”

Like most countries globally, Qatar has seen a sharp rise in digital payments in recent years. Last year, these payments accounted for over $7.6 billion, twice the figure from 2017, and it’s expected to hit $12 billion by 2028. A survey by Visa (NASDAQ: V) this year revealed that 85% of Qatari businesses found digital payments to increase revenue, with 93% expressing strong intention to invest in expanding their payment tech.

Qatar’s CBDC effort mirrors those of its Middle Eastern neighbors, who have all prioritized wholesale CBDCs. Saudi Arabia, Bahrain and the UAE are all exploring digital currencies, with cross-border payments being the most cited target sector.

To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.

Watch: Finding ways to use CBDC outside of digital currencies